Monday, October 01, 2012

Skin In the Game

If it's going to matter to you, you've got to have skin in the game.  It doesn't matter if you're playing sandlot baseball, or if we're talking about income taxes.

Glenn Reynolds has a great little opinion piece at USA Today where he lays out some conservative ideas for tax reform.  I agree with most of what he says, and I think that this is something that we should be talking about.  If everyone had to pay some federal income tax, even a minimal amount like 2%-5%, then they'd have skin in the game.  It really doesn't matter how much or how little a person pays, what matters is that they're participating.  He's also got another great idea, tying federal tax levels to federal spending.
I'd like to see a system where everyone pays some minimum amount of tax — enough to notice, say 2%-5% of gross income. And that amount should go up noticeably when the federal government spends more, and go down noticeably when it spends less.
In a given year, that might only affect some individuals by a few hundred dollars, but as anyone who has followed local-government property tax fights knows, people can get pretty exercised over a few hundred dollars when they know it's coming out of their pocket and not someone else's.
I'd also like to close the government service-private sector loophole. If someone is appointed or elected to a federal position, then after they leave government service everything they make over $125,000 should be taxed at a 100% rate for five years. That would stop folks from parlaying government service into lucrative private sector jobs.

We really need to talk about some sort of plan like this.


Jester said...

While I agree with this in principal, I think it is in effect for many people in the way of sales taxes. Now, I agree again that it would hurt more to write out a check at the end of the year or to not get back the full amount of taxes paid in I think that it would create so much squealing that we never will see this. This tells me that it should be enacted, perhaps with the caveat of removing sales taxes and having those added to the end of the year taxes. (Or even just doing that, no more sales taxes collected.) I can't imagine any politician floating this idea for more than five seconds however..

Pawpaw said...

Naw, Jester (and thanks for commenting), but sales taxes are basically state and local. I'm talking about federal income taxes and the problem is that too many people don't pay federal income tax. I think that everyone should have skin in the game, both federal, state, and local.

Jester said...

Yeah, I understand most of those things are local and state taxes, but based on how they are laid out people don't notice them as acutely as the end of the year.
The principal is very solid, when you have something to loose in a financial sense it becomes more real.
Then again with the freebies handed out the game becomes real to them too.